More than half of middle-class seniors won’t be able to afford housing and care, report says

Middle-income seniors are facing rising health-care and housing costs, a new study reports -- and within a decade, more than half of them won't have the resources to cover the expense.

In 10 years, more than half of middle-income Americans over age 75 will be unable to afford the care they need to live independently or the expense of a nursing home or assisted living facility, according to a study released Wednesday.

The projections — meant to be a wake-up call to policy-makers, providers, investors and developers — spell out a combination of escalating housing and care costs, longer lifespans, increasing chronic health conditions and a shrinking population of would-be family caregivers.

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The consequences, while potentially dire for the nation as a whole, could be disastrous for Florida, where nearly 20 percent of the population is over 65 — the highest rate of any state in the nation.

“The situation today is that we already have nearly 72,000 [seniors] on waiting lists for home- and community-based services in the state of Florida — services that are intended to keep people in their homes and out of institutions,” said Dave Bruns, a spokesman for AARP Florida. “And, meanwhile, the cost of institutional care is rising faster than the rate of inflation.”

The study, led by researchers at the University of Chicago, defined middle income as those with roughly $25,000 to $74,300 a year in financial resources — too much money to qualify for Medicaid but not enough to afford the private-sector housing and care options currently on the market.

The findings, published by the professional journal Health Affairs, may actually underestimate the problem, researchers acknowledge. The study calculated expenses that included only $5,000 in average annual out-of-pocket medical spending, a figure at the very low end of the average.

Many of those affected will be people who worked full-time careers for decades, including those who own their homes and tap into its equity, the study said.

“We’re talking about trade union members, health-care workers, teachers, first responders, government workers — these are people who worked hard their whole lives, but in many instances don’t have the resources to afford the housing with supportive services that they’re very likely going to need,” said Bob Kramer, founder and strategic adviser at the National Investment Center for Seniors Housing & Care, which commissioned the study.

For one thing, the authors noted, the number of middle-income seniors is projected to nearly double by 2029, from 7.9 million in 2014 to 14.4 million. An estimated 60 percent of this group will have mobility limitations, 20 percent will have high needs for health care and help with daily living activities, and 54 percent will lack the necessary financial resources to pay for those services along with housing.

“Even if they had resources at the time they retired, they don’t have them at the time they need home care or institutional care,” Bruns said. “This is what we see all the time. At first they’re fine, and then the husband has a heart attack or the wife has breast cancer, and the now their assets are down to $100,000, and their co-pays on prescriptions are $400 a month each. The next setback puts them over the edge.”

Especially, he noted, if they develop Alzheimer’s or other types of dementia, which may require round-the-clock supervision.

Statewide, there are nearly a half-million residents age 75 and over who qualify as middle income, but that’s expected to grow significantly in the coming decade.

Florida could embrace this challenge and meet it head on.

Dave Bruns, AARP Florida

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Without policy changes, the only option for many individuals, Kramer said, is to rely on family members, though that pool will shrink in future years. Baby boomers had fewer children than their parents did, and those children are more likely to work full-time or live farther away than their predecessors.

If they can’t find volunteer help, researchers said, middle-income seniors will likely spend down until they are living in poverty and qualify for Medicaid, the federal-state safety net that covers long-term care.

At Seniors First, the nonprofit that aids low-income Orange and Seminole county residents with a range of services to help them stay out of institutions, President and CEO Marsha Lorenz said the waiting list for help is already long and getting longer.

“It has really escalated with people living longer with advances in medical care,” she said. “And we all know there's a huge shortage of affordable housing in this area. So people are making decisions between paying rent and buying their medications and putting food on the table.”

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While Florida lawmakers have increased spending for home-based services — housekeeping, home nursing visits, aides who help with grocery shopping and meal preparation — the funding has not kept pace with population growth.

“Florida could embrace this challenge and meet it head on,” he said, in part by adopting some of the lower-cost solutions from other states. Washington, for instance, spends half of its Medicaid long-term care budget for home- and community-based care services to allow people to continue living in their own homes. Florida uses only 22 percent.

And Kramer said the private sector holds potential answers too. Technological developments are already helping some people live independently, and investors need to recognize the potential of developing products and housing solutions for this population.

“There’s a huge market here,” he said. “It may be a lower return on investment than at the high end, but it’s a more consistent one for the long term, and we think that should be attractive.”